A familiar story?

The cost of clinical negligence claims in Great Britain continues its alarming upward trajectory, with annual payments tripling over the last two decades and liabilities reaching an estimated £60 billion. While the severity of patient harm in high-value cases, particularly in maternity care, accounts for a significant portion of damages, the true cost drivers are multifaceted. Disproportionate legal costs in lower-value claims and the fluctuating Personal Injury Discount Rate also play a critical role. This article explores the complex interplay of these factors, examining the statutory framework, recent reforms, and the ongoing efforts by bodies like NHS Resolution to manage these escalating financial pressures on the National Health Service.

The rising cost of clinical negligence claims in Great Britain has become a persistent and pressing concern, diverting substantial resources from frontline healthcare services. Far from being a new phenomenon, this issue has seen government liabilities quadruple in real terms since 2006-07, reaching an estimated £60 billion by March 2025. Annual settlement costs alone have surged to £3.6 billion in 2024-25, with forecasts suggesting they could exceed £4 billion by the end of the decade. This escalating expenditure underscores a critical challenge for the National Health Service (NHS) and the public purse, prompting repeated calls for meaningful action and reform.

While the human tragedy of patient harm is the undeniable genesis of these claims, the financial burden is often exacerbated by factors beyond the initial compensation for injury. Indeed, the system’s true cost driver is frequently not solely the claim itself, but rather the intricate web of legal processes, economic assumptions, and systemic pressures that surround it. This article delves into the core legal and financial dynamics contributing to this familiar story of rising costs, examining the key drivers and the ongoing efforts to address them within the British legal landscape.

The framework for clinical negligence claims in Great Britain is rooted in the common law principle of negligence, requiring a breach of a legal duty of care that directly causes harm to a patient. If proven, the NHS, as the employer of clinicians, is legally liable to pay compensation and cover legal fees. NHS Resolution (NHSR) is the arm's-length body responsible for administering seven clinical negligence indemnity schemes for general practice and secondary healthcare services in England, managing these claims on behalf of NHS organisations.

A pivotal element in calculating lump sum compensation for future pecuniary losses, such as loss of earnings and care needs, is the Personal Injury Discount Rate (PIDR). This rate, set by the Lord Chancellor under the Damages Act 1996, is intended to reflect the real rate of return a claimant can expect from investing their lump sum award. Historically, the PIDR remained at +2.5% from 2001 until 2017, when it was controversially reduced to -0.75%, significantly increasing the value of high-value claims. The Civil Liability Act 2018 subsequently amended the Damages Act 1996, mandating a review of the rate every five years and establishing an expert panel for consultation. Following a review, the rate was adjusted to -0.25% in August 2019 and further increased to 0.5% effective from 11 January 2025. These fluctuations have a profound impact on the quantum of damages, particularly for catastrophic injury claims, directly influencing the overall cost of clinical negligence.

A significant driver of the escalating costs is the disproportionate impact of a small number of very-high-value claims. While claims for £1 million or more constitute only 2% of the total volume, they account for a staggering 68% of all costs in 2024-25. Maternity-related cases are a prime example, representing only 8% of claims but contributing to 83% of all damages awarded in some periods, with an average cost of £11.2 million per claim in obstetrics. The assumption of private care costs in these high-value settlements, even when claimants may receive free NHS care, has been identified by NHS Resolution as a major contributory factor to increasing costs.

Conversely, legal costs in lower-value claims present another significant challenge. For claims settling at £25,000 or less, which represent around three-quarters of all clinical negligence claims by volume, the legal costs often vastly exceed the damages payable to claimants. In 2024-25, the ratio of claimant and NHS legal costs to damages for low-value claims was 3.7:1, with legal costs accounting for £143 million of the £183 million cost to settle these cases. Claimant legal fees have seen a substantial real-terms increase, from £148 million in 2006-07 to £538 million in 2024-25. This imbalance has led to government proposals for fixed recoverable costs for claims up to £25,000, aimed at streamlining the process and reducing the financial impact on the NHS, though the necessary legislation has yet to be introduced.

The Personal Injury Discount Rate, as established under the Damages Act 1996 and refined by the Civil Liability Act 2018, continues to be a contentious area. Its adjustments directly influence the lump sum awards for future losses, with each change having significant financial implications for both claimants and defendants. The shift from a positive rate to a negative one in 2017, and subsequent adjustments, highlight the complexity of balancing full compensation for claimants with the financial sustainability of the indemnity schemes. Expert witness fees also contribute to the overall cost, governed by Civil Procedure Rules Part 35 and Legal Aid Agency Remuneration Regulations, with rates varying based on the complexity of reports and court attendance.

NHS Resolution has made considerable efforts to mitigate these rising costs by focusing on early resolution and alternative dispute resolution (ADR). The proportion of claims resolved without litigation has increased significantly, from 66% in 2006-07 to 83% in 2024-25, demonstrating a commitment to non-adversarial approaches. However, despite these efforts, the fundamental issue of patient safety and the prevention of negligence remains paramount. As noted by the National Audit Office, while legal and claims management reforms offer some relief, the most crucial step in controlling costs is to reduce the incidence of negligence itself.

The escalating costs of clinical negligence claims in Great Britain present a formidable and enduring challenge for the NHS and the wider public sector. The interplay of high-value catastrophic injury claims, particularly in maternity, coupled with disproportionate legal costs in lower-value cases and the complexities of the Personal Injury Discount Rate, creates a multifaceted financial burden. While NHS Resolution's proactive engagement in alternative dispute resolution has shown positive results in resolving claims outside of formal litigation, these efforts alone cannot fully stem the tide of rising liabilities.

For practitioners, the landscape demands a nuanced understanding of these cost drivers and the evolving regulatory environment. Claimant lawyers must navigate the intricacies of the discount rate and potential fixed recoverable costs regimes, ensuring fair compensation for their clients while being mindful of proportionality. Defence lawyers, particularly those representing NHS bodies, face the ongoing challenge of managing significant liabilities and advocating for reforms that balance patient rights with financial sustainability. Looking ahead, the government's anticipated action plan on clinical negligence costs, expected in autumn 2026, will be crucial. Practitioners should closely monitor any proposed legislative changes, particularly regarding fixed recoverable costs and potential reforms to the assumption of private care costs, as these will undoubtedly reshape the future of clinical negligence litigation in Great Britain. Ultimately, a sustained focus on patient safety and harm prevention remains the most effective, albeit long-term, strategy for addressing this familiar and costly story.